Can Bitcoin Help Alleviate Poverty?

The advent of digital currencies, such as bitcoin, marks the beginning of a new era. Despite severe criticism, bitcoin is very much alive and thriving. The transnational currency benefits users by low or no transaction fees, transparent transactions, lower risks and others.

In fact, bitcoin has the potential to alleviate poverty. Bitcoin.org says that by cutting high transaction fees on workers' salary, Bitcoin could play a role in reducing poverty in many countries.

In developing countries, a major section of population is often deprived of basic financial services. The reasons can be many – low branch banking, underdeveloped financial infrastructure, low level of financial literacy and several others. The Bitcoin system, without its need to depend on a third entity such as a bank, could majorly expand on existing services and in a way that directly integrates users with the global economy, Jeff Fong of Policy.mic explains.

“For the time being, the population of Bitcoin users will probably remain residents of the developed world, although middle-income countries like Argentina may soon expand out the user base. But if and when Bitcoin grows to the point of truly international acceptance, it may be the world's poorest that stand to gain the most”, Fong added.

The adoption of bitcoin in these underdeveloped countries, however, is almost negligible. Taking the case of Kenya, for instance, a recent report by Motherboard states portrayal by the Western media about Kenya as a leading hub for bitcoin is far from reality. Many bitcoin startups disappeared or have changed directions.

"People want to hear about, talk about how bitcoin can help by fighting poverty," said Kenyan writer Daniel Nyairo. "Talking about how some guy is making money and getting rich, the audience in the West is not really interested in that. People want to hear stories about Africa related to pain and poverty, and how people are helping that."

Nairo said that the bitcoin community in Kenya is small, but it’s growing—a few hundred regulars, mostly traders. He doesn't see widespread bitcoin adoption to happen soon, unless a killer app arrives. Moreover, widespread bitcoin adoption is also subject to several obstacles. The Kenyan government also has very been unclear on how it will regulate bitcoin.

William Blair partner Brian Singer believes that the blockchain technology that underpins bitcoin has greater ability to alleviate poverty. In an interview with Forbes, Singer said, “It’s the blockchain encryption. And there are interesting things. I think bitcoin, or the, really, blockchain encryption that’s behind it, has a greater ability to bring more of the world’s population out of poverty than anything we’ve seen in”.